TREASURIES-Yields hit multi-year highs after solid jobs report

(Recasts; updates yields, market activity, comments, adds
table)
By Kate Duguid
NEW YORK, Oct 5 (Reuters) - U.S. Treasury yields across
maturities hit multi-year highs on Friday, with the 10-year
benchmark yield at a seven-year peak, after the Labor Department
reported U.S. job growth slowed in September and wages rose
steadily, suggesting modest inflation.
The 30-year Treasury bond reached a four-year
high of 3.412 percent, up 5.8 basis points from late Thursday.
The benchmark 10-year yield rose to 3.246 percent,
up 5.1 basis points from late Thursday.
Longer-dated yields, which reflect views of the health of
the economy, often rise on strong data. Robust economic growth
prompts many investors to sell safe-haven Treasuries and take on
assets with higher potential returns.
"We take it as a strong report that doesn't change the
landscape and that should allow the 10-year yield to creep up to
3.25 percent," said Matt Toms, chief investment officer of fixed
income at Voya Investment Management.
Nonfarm payrolls increased by 134,000 jobs last month, the
fewest in a year, but the Labor Department report also showed a
steady rise in wages, implying a rise in inflation, which could
keep the Federal Reserve on its path of gradual interest rate
increases.
"The report was solid even though the headline did miss. The
unemployment rate fell for the right reasons and the wage number
was strong. What was odd was the rate-market reaction to this,"
said Priya Misra, head of global rates strategy at TD
Securities.
Yields fell immediately after the report, then whipsawed to
hit session highs. Yields kept rising in afternoon trade as
Treasury prices sank, extending a sell-off this week.
On Wednesday, a U.S. government bond index
compiled by Bank of America Merrill Lynch posted its biggest
daily price loss since March 2017 on economic reports about the
U.S. sevice sector and private payrolls.
The yield curve steepened, with the spread between two- and
10-year yields last at 34 basis points, up from
31.5 late Thursday. The five- and 30-year yield spread
was last at 32.5 basis points also up from
Thursday.
October 5 Friday 1:19PM New York / 1719 GMT
Price
US T BONDS DEC8 137-4/32 -0-25/32
10YR TNotes DEC8 117-160/256 -0-60/25
6
Price Current Net
Yield % Change
(bps)
Three-month bills 2.175 2.2167 -0.005
Six-month bills 2.355 2.4157 0.002
Two-year note 99-186/256 2.8932 0.013
Three-year note 99-84/256 2.9905 0.020
Five-year note 99-18/256 3.0779 0.026
Seven-year note 98-228/256 3.1785 0.038
10-year note 96-252/256 3.2347 0.040
30-year bond 92-112/256 3.4054 0.051
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 17.25 0.25
spread
U.S. 3-year dollar swap 15.75 0.25
spread
U.S. 5-year dollar swap 11.00 -0.25
spread
U.S. 10-year dollar swap 3.75 -0.75
spread
U.S. 30-year dollar swap -11.00 -1.25
spread
(Reporting by Kate Duguid; editing by Steve Orlofsky, Dan
Grebler and David Gregorio)